Amylyx Pharmaceuticals, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officers and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023. Based on the evaluation of 131 our disclosure controls and procedures as of December 31, 2023, our Chief Executive Officers and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d‑15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting include policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions relating to our business and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of the Company’s Chief Executive Officers and the Company’s Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting under the 2013 “Internal Control—Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on such assessment, our management concluded that we maintained effective internal control over financial reporting as of December 31, 2023. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 132 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Amylyx Pharmaceuticals, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Amylyx Pharmaceuticals, Inc. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 22, 2024, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Boston, Massachusetts February 22, 2024 133 Item 9B. Other Information. During the three months ended December 31, 2023, the following officers or directors of the Company (as defined in Rule 16a-1(f)) adopted the following trading plans for the sale of our common stock pursuant to the terms of the applicable plan; such plans are intended to satisfy the affirmative defense conditions of Rule 10b5–1(c)(1) of the Exchange Act: • Joshua Cohen , our Co-Chief Executive Officer and a member of our board of directors, adopted a new Rule 10b5-1 trading plan on December 15, 2023 , which is scheduled to expire on November 30, 2024 . The aggregate number of shares of our common stock authorized to be sold under this new arrangement is 60,000 ; • Justin Klee , our Co-Chief Executive Officer and a member of our board of directors, adopted a new Rule 10b5-1 trading plan on December 15, 2023 , which is scheduled to expire on November 30, 2024 . The aggregate number of shares of our common stock authorized to be sold under this new arrangement is 60,000 . • James Frates , our Chief Financial Officer , adopted a new Rule 10b5-1 trading plan on December 14, 2023 , which is scheduled to expire on December 1, 2024 . The aggregate number of shares of our common stock authorized to be sold under this new arrangement is 90,000 . • Gina M. Mazzariello , our Chief Legal Officer and General Counsel , adopted a new Rule 10b5-1 trading plan on December 14, 2023 , which is scheduled to expire on March 8, 2025 . The aggregate number of shares of our common stock authorized to be sold under this new arrangement is 76,290 , which includes shares that may be withheld or sold to cover withholding taxes at the time of vesting. No other director or officer has adopted or terminated any non-Rule 10b5-1 trading arrangements during the quarter ended December 31, 2023 . Item 9C . Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 134 PART III Item 10 . Directors, Executive Officers and Corporate Governance. The information required by this Item 10 will be included in the Proposal No. 1, Corporate Governance and Executive Officers section of our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference. Item 11 . Executive Compensation. The information required by this Item 11 will be included in the Executive Compensation and Director Compensation sections (excluding the information under the heading “Pay Versus Performance”) of our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference. Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item 12 will be included in the Security Ownership of Certain Beneficial Owners and Management sections of our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference. Item 13 . Certain Relationships and Related Transactions, and Director Independence. The information required by this Item 13 will be included in the Certain Relationships and Related Party Transactions and Corporate Governance sections of our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference. Item 14 . Principal Accountant Fees and Services. Our independent public accounting firm is Deloitte & Touche LLP , Boston, Massachusetts , PCAOB Auditor ID: 34 . The information required by this Item 14 will be included in the Proposal No. 2 section of our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference. 135 PART IV Item 15 . Exhibits, Financial Statement Schedules. a) Financial Statements For a list of the consolidated financial statements included herein, see Index to the Consolidated Financial Statements on page F-1 of this Annual Report, which is incorporated into this Item by reference. b) Exhibits Exhibit Number Description 3.1 Fourth Amended and Restated Certificate of Incorporation of Amylyx Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2022). 3.2 Second Amended and Restated Bylaws of Amylyx Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 11, 2022). 4.1 Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 4.2 Second Amended and Restated Investors’ Rights Agreement, dated as of July 1, 2021, among the Registrant and the parties thereto (Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261703) filed with the Securities and Exchange Commission on December 16, 2021). 4.3 Description of Securities (Incorporated by reference to Exhibit 4.3 to the Registrant’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2022). 10.1# 2015 Stock Option and Incentive Plan, and form of award agreements thereunder (Incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.2# 2022 Stock Option and Incentive Plan, and form of award agreements thereunder (Incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.3# Non-Employee Director Compensation Policy (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 21, 2023). 10.4# Executive Cash Incentive Bonus Plan (Incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.5# 2022 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.6# Lease Agreement, dated as of October 23, 2018, as amended, by and between the Registrant and Bullfinch Square Limited Partnership (Incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261703) filed with the Securities and Exchange Commission on December 16, 2021). 10.7# Form of Employment Agreement, between the Registrant and Josh Cohen (Incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.8# Form of Employment Agreement, between the Registrant and Justin Klee (Incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.9# Form of Employment Agreement, between the Registrant and James Frates (Incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 136 10.10# Form of Employment Agreement, between the Registrant and Margaret Olinger (Incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.11# Form of Employment Agreement, between the Registrant and Patrick D. Yeramian, M.D. (Incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261703) filed with the Securities and Exchange Commission on January 3, 2022). 10.12# Amendment to Employment Agreement, effective as of December 1, 2022, by and between the Company and Patrick Yeramian (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 6, 2022). 10.13#* Amendment to Employment Agreement, effective as of November 27, 2023, by and between the Company and Patrick Yeramian. 10.14# Form of Employment Agreement, between the Registrant and Gina Mazzariello (Incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2023). 10.15#* Form of Employment Agreement, between the Registrant and Camille Bedrosian. 10.16# Form of Officer Indemnification Agreement (Incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261703) filed with the Securities and Exchange Commission on December 16, 2021). 10.17#* Separation Agreement between Registrant and Margaret Olinger dated December 31, 2023. 10.18† Master Manufacturing Services Agreement, dated as of November 12, 2019, by and between the Registrant and Patheon Inc. (Incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261703) filed with the Securities and Exchange Commission on December 16, 2021). 10.19† First Amendment, dated as of January 18, 2021, to Product Agreement, dated as of November 12, 2019, pursuant to the Master Manufacturing Services Agreement, dated as of November 12, 2019, by and between the Registrant and Patheon Inc. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2023). 10.20† Second Amendment, dated as of March 20, 2023, to Product Agreement, dated as of November 12, 2019, as amended by Amendment No. 1, dated as of January 18, 2021, pursuant to the Master Manufacturing Services Agreement, dated as of November 12, 2019, by and between the Registrant and Patheon Inc. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2023). 10.21† Supply Agreement, dated as of October 29, 2019, by and between the Registrant and CU Chemie Uetikon GmbH (Incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261703) filed with the Securities and Exchange Commission on December 16, 2021). 10.22† First Amendment, effective as of January 1, 2023, to the Supply Agreement, dated as of October 29, 2019, by and between the Registrant and CU Chemie Uetikon GmbH (Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2023). 10.23† Research, Development and Supply Agreement, dated as of December 9, 2019, and Deed of Amendment, dated as of July 26, 2021, by and between the Registrant and ICE S.p.A. (formerly Prodotti Chimici e Alimentari S.p.A.), as amended (Incorporated by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261703) filed with the Securities and Exchange Commission on December 16, 2021). 10.24† Commercial Supply Agreement, dated as of August 8, 2023, by and between the Registrant and ICE S.p.A. (formerly Prodotti Chimici e Alimentari S.p.A.) (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on form 10-Q filed with the Securities and Exchange Commission on August 10, 2023). 21.1* List of Subsidiaries of Registrant. 23.1* Consent of Deloitte & Touche LLP, independent registered public accounting firm. 31.1* Certification of Co-Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Co-Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 137 32.1 + Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 + Certification of Co-Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3 + Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1* Compensation Recovery Policy 101.INS* Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. + Furnished herewith. This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, except to the extent specifically incorporated by reference into such filing. # Indicates a management contract or any compensatory plan, contract or arrangement. † Portions of this exhibit (indicated by asterisks) have been omitted in accordance with Item 601(b)(10) of Regulation S-K. c) Financial Statement Schedules No financial statements have been submitted because they are not required or are not applicable or because the information required is included in the consolidated financial statements or the notes thereto. Item 16 . Form 10-K Summary None. 138 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . AMYLYX PHARMACEUTICALS, INC. Date: February 22, 2024 By: /s/ Joshua B. Cohen Joshua B. Cohen Co-Chief Executive Officer Date: February 22, 2024 By: /s/ Justin B. Klee Justin B. Klee Co-Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Joshua B. Cohen Co-Chief Executive Officer and Director (Principal Executive Officer) February 22, 2024 Joshua B. Cohen /s/ Justin B. Klee Co-Chief Executive Officer and Director (Principal Executive Officer) February 22, 2024 Justin B. Klee /s/ James M. Frates Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) February 22, 2024 James M. Frates /s/ George Mclean Milne Jr. Director February 22, 2024 George Mclean Milne Jr. Ph.D. /s/ Paul Fonteyne Director February 22, 2024 Paul Fonteyne, M.S., M.B.A. /s/ Daphne Quimi Director February 22, 2024 Daphne Quimi /s/ Karen Firestone Director February 22, 2024 Karen Firestone 139 Amylyx Pharmaceuticals, Inc. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB Auditor ID: 34) F- 2 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 5 Consolidated Statements of Comprehensive Income (Loss ) F- 6 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit ) F- 7 Consolidated Statements of Cash Flows F- 8 Notes to Consolidated Financial Statements F- 9 F- 1 REPORT of independent registered public accounting firm To the stockholders and the Board of Directors of Amylyx Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Amylyx Pharmaceuticals, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Variable consideration related to gross-to-net (“GTN”) adjustments - Refer to Notes 2 and 3 to the financial statements Critical Audit Matter Description Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration related to certain GTN adjustments. Components of GTN adjustments include trade discounts and allowances, product returns, third-party payor rebates, and other allowances that are offered within contracts between the Company, its customers and payors relating to the sale of products. These GTN adjustments are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). Trade discounts and allowances, provider chargebacks and returns are recorded as reductions of accounts receivables, net on the consolidated balance sheets. Government and other rebates are recorded as a component of accrued expenses on the consolidated balance sheets. Certain of the GTN adjustments involve the use of significant management assumptions and judgments. These significant assumptions and judgments include consideration of historical experience, payer channel mix (e.g., Medicare or Medicaid), current contract prices under applicable programs, unbilled claims and processing time lags and inventory levels in the distribution channel. F- 2 Given the complexity involved, we identified management’s estimation of significant assumptions as a critical audit matter. Auditing these significant assumptions involved especially subjective judgment and audit effort. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the GTN adjustments included the following, among others: • We tested the effectiveness of internal controls over the development of the Company’s significant assumptions utilized within the Company’s GTN model. • We evaluated the appropriateness and consistency of the Company’s methods and significant assumptions used to calculate the GTN adjustments. • We tested significant assumptions used to calculate the GTN adjustments by: o Performing sensitivity analyses addressing significant assumptions and subjective inputs utilized in the calculation. o Reviewing customer and third-party payor contracts and modifications. o Reviewing the terms of the discounts and rebates associated with the governmental programs the Company participates in. o Developing a range of independent expectations of the significant assumptions, including a comparison of contract prices under applicable programs to those used in management’s calculations. o Performing lookback analyses by comparing amounts actually invoiced to and paid by the Company to the corresponding GTN adjustment recorded by the Company. • We tested the mathematical accuracy of the GTN model. /s/ Deloitte & Touche LLP Boston, Massachusetts February 22, 2024 We have served as the Company’s auditor since 2020. F- 3 AMYLYX PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 170,201 $ 62,526 Short-term investments 201,161 284,419 Accounts receivable, net 40,050 15,306 Inventories 38,323 9,769 Prepaid expenses and other current assets 14,931 10,113 Total current assets 464,666 382,133 Property and equipment, net 2,686 2,611 Restricted cash equivalents 719 719 Operating lease right-of-use assets 3,725 5,524 Long-term inventories 44,957 — Other assets 701 466 Total assets $ 517,454 $ 391,453 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 22,061 $ 6,257 Accrued expenses 57,724 38,312 Operating lease liabilities, current portion 2,257 2,040 Total current liabilities 82,042 46,609 Operating lease liabilities, net of current portion 1,980 4,237 Total liabilities 84,022 50,846 Commitments and contingencies (Note 18) Stockholders’ equity: Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized — — Common stock, $ 0.0001 par value; 300,000,000 shares authorized; 67,707,432 and 66,512,011 shares issued and outstanding as of December 31, 2023 and 2022, respectively 7 7 Additional paid-in capital 738,177 694,906 Accumulated deficit ( 304,949 ) ( 354,220 ) Accumulated other comprehensive income (loss) 197 ( 86 ) Total stockholders’ equity 433,432 340,607 Total liabilities, redeemable convertible preferred stock and stockholders' equity $ 517,454 $ 391,453 The accompanying notes are an integral part of these consolidated financial statements. F- 4 AMYLYX PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) Year Ended December 31, 2023 2022 2021 Revenues: Product revenue, net $ 380,786 $ 22,230 $ — Grant revenue — — 285 Total revenues 380,786 22,230 285 Operating expenses: Cost of sales 25,441 2,993 — Research and development 128,187 93,450 44,040 Selling, general and administrative 188,356 127,128 38,933 Total operating expenses 341,984 223,571 82,973 Income (loss) from operations 38,802 ( 201,341 ) ( 82,688 ) Other income (expense), net: Interest income 16,155 4,291 36 Change in fair value of convertible notes — — ( 5,228 ) Other expense, net ( 660 ) ( 551 ) ( 51 ) Total other income (expense), net 15,495 3,740 ( 5,243 ) Income (loss) before income taxes 54,297 ( 197,601 ) ( 87,931 ) Provision for income taxes 5,026 774 — Net income (loss) $ 49,271 $ ( 198,375 ) $ ( 87,931 ) Net income (loss) per share Basic $ 0.73 $ ( 3.39 ) $ ( 13.35 ) Diluted $ 0.70 $ ( 3.39 ) $ ( 13.35 ) Weighted-average shares used in computing net income (loss) per share Basic 67,234,465 58,495,587 6,586,349 Diluted 69,991,340 58,495,587 6,586,349 The accompanying notes are an integral part of these consolidated financial statements. F- 5 AMYLYX PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2023 2022 2021 Net income (loss) $ 49,271 $ ( 198,375 ) $ ( 87,931 ) Other comprehensive income (loss): Foreign currency translation gain (loss) 188 ( 69 ) 14 Net unrealized gain (loss) on investments held 95 ( 26 ) ( 5 ) Other comprehensive income (loss) 283 ( 95 ) 9 Comprehensive income (loss) $ 49,554 $ ( 198,470 ) $ ( 87,922 ) The accompanying notes are an integral part of these consolidated financial statements. F- 6 AMYLYX PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (in thousands, except share data) Redeemable Convertible Preferred Stock Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Shares Amount Capital Income (Loss) Deficit Equity (Deficit) Balance as of January 1, 2021 20,786,444 $ 72,062 6,137,206 $ 1 $ 1,188 $ — $ ( 67,914 ) $ ( 66,725 ) Issuance of Series C-1 redeemable convertible preferred stock, net of issuance costs of $ 209 13,150,430 134,791 — — — — — — Conversion of convertible notes and accrued interest into Series C-2 redeemable convertible preferred stock, net of issuance cost of $ 50 3,170,585 32,498 — — — — — — Issuance of common stock upon exercise of stock options — — 883,281 — 343 — — 343 Stock-based compensation expense — — — — 3,136 — — 3,136 Other comprehensive loss — — — — — 9 — 9 Net loss — — — — — — ( 87,931 ) ( 87,931 ) Balance as of December 31, 2021 37,107,459 $ 239,351 7,020,487 $ 1 $ 4,667 $ 9 $ ( 155,845 ) $ ( 151,168 ) Conversion of preferred stock into common stock upon initial public offering ( 37,107,459 ) ( 239,351 ) 39,474,330 4 239,347 — — 239,351 Issuance of common stock upon initial public offering, net of issuance costs of $ 19,639 — — 11,369,369 1 196,378 — — 196,379 Issuance of common stock upon follow-on offering, net of issuance costs of $ 15,719 — — 7,697,812 1 230,611 — — 230,612 Issuance of common stock upon exercise of stock options — — 950,013 — 2,189 — — 2,189 Stock-based compensation expense — — — — 21,714 — — 21,714 Other comprehensive loss — — — — — ( 95 ) — ( 95 ) Net loss — — — — — — ( 198,375 ) ( 198,375 ) Balance as of December 31, 2022 — $ — 66,512,011 $ 7 $ 694,906 $ ( 86 ) $ ( 354,220 ) $ 340,607 Issuance of common stock upon exercise of stock options — — 1,010,376 — 5,725 — — 5,725 Issuance of common stock upon vesting of RSUs — — 185,045 — — — — — Stock-based compensation expense — — — — 37,546 — — 37,546 Other comprehensive income — — — — — 283 — 283 Net income — — — — — — 49,271 49,271 Balance as of December 31, 2023 — $ — 67,707,432 $ 7 $ 738,177 $ 197 $ ( 304,949 ) $ 433,432 The accompanying notes are an integral part of these consolidated financial statements. F- 7 AMYLYX PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended December 31, 2023 2022 2021 Cash flows provided by (used in) operating activities: Net income (loss) $ 49,271 $ ( 198,375 ) $ ( 87,931 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Stock-based compensation expense 37,161 21,714 3,136 Depreciation expense 1,088 487 52 (Accretion) amortization of investment (discounts) premiums ( 9,940 ) ( 2,056 ) 121 Change in fair value of convertible notes — — 5,228 Changes in operating assets and liabilities: Accounts receivable, net ( 24,744 ) ( 15,306 ) — Inventories ( 73,129 ) ( 9,769 ) — Interest receivable 23 487 ( 144 ) Prepaid expenses and other current assets ( 4,817 ) ( 5,221 ) ( 4,486 ) Operating lease right-of-use assets 1,799 1,635 — Other assets ( 231 ) ( 456 ) 125 Accounts payable 15,882 1,854 670 Accrued expenses and deferred rent 21,597 26,052 8,432 Operating lease liabilities ( 2,041 ) ( 917 ) — Accrued interest and accrued interest—related parties — — ( 2 ) Net cash provided by (used in) operating activities 11,919 ( 179,871 ) ( 74,799 ) Cash flows provided by (used in) investing activities: Purchases of property and equipment ( 1,241 ) ( 2,526 ) ( 353 ) Purchases of short-term investments ( 300,826 ) ( 415,873 ) ( 49,053 ) Proceeds from maturities of short-term investments 394,120 179,411 3,000 Net cash provided by (used in) investing activities 92,053 ( 238,988 ) ( 46,406 ) Cash flows provided by financing activities: Repayment and proceeds from PPP loan — — ( 263 ) Proceeds from initial public offering — 200,897 — Proceeds from follow-on offering — 231,550 — Initial public offering costs paid — ( 2,044 ) — Follow-on offering costs paid ( 136 ) ( 803 ) — Proceeds from issuance of convertible notes—related parties — — 14,272 Proceeds from issuance of convertible notes, net of issuance costs — — 11,887 Issuance costs related to conversion of convertible notes — — ( 50 ) Proceeds from issuance of Series C-1 redeemable convertible preferred stock — — 135,000 Issuance costs related to issuance of Series C-1 redeemable convertible preferred stock — — ( 209 ) Proceeds from exercise of stock options 6,994 2,189 343 Withholding taxes paid on stock-based awards ( 3,315 ) — — Payment of deferred offering costs — — ( 2,474 ) Net cash provided by financing activities 3,543 431,789 158,506 Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents 160 ( 65 ) 13 Net increase in cash, cash equivalents and restricted cash equivalents 107,675 12,865 37,314 Cash, cash equivalents and restricted cash equivalents, beginning of period 63,245 50,380 13,066 Cash, cash equivalents and restricted cash equivalents, end of period $ 170,920 $ 63,245 $ 50,380 Supplemental disclosure of cash flow information: Conversion of convertible notes and accrued interest into Series C-2 redeemable convertible preferred stock $ — $ — $ 32,548 Unrealized gain (loss) on short-term investments $ 95 $ ( 26 ) $ ( 5 ) Taxes withheld on stock-based awards included in accrued expenses $ 23 $ — $ — Purchases of property and equipment included in accounts payable $ 20 $ 98 $ 22 Deferred offering costs included in accounts payable and accrued expenses $ — $ — $ 967 Right-of-use assets and liabilities upon ASC 842 adoption $ — $ 2,201 $ — Right-of-use assets obtained in exchange for lease liabilities $ — $ 4,958 $ — Movement of deferred offering costs to equity $ — $ 5,457 $ — Follow-on offering costs included in accounts payable and accrued expenses $ — $ 136 $ — Conversion of preferred stock to common stock upon initial public offering $ — $ 239,351 $ — Income taxes paid $ 6,389 $ 27 $ — The accompanying notes are an integral part of these consolidated financial statements. F- 8 AMYLYX PHARMACEUTICALS, INC. NOTES TO Consolidated FINANCIAL STATEMENTS 1. Nature of Business Amylyx Pharmaceuticals, Inc., together with its wholly owned subsidiaries, known as Amylyx or the Company, is a commercial-stage biotechnology company with a mission to end the suffering caused by neurodegenerative diseases. The Company is pursuing amyotrophic lateral sclerosis, or ALS, as its first indication and is focused on the development and potential commercialization of AMX0035 for ALS globally. AMX0035 is approved by the U.S. Food and Drug Administration, or the FDA, and marketed as RELYVRIO ® (sodium phenylbutyrate and taurursodiol, also known as ursodoxicoltaurine) for the treatment of ALS in adults in the U.S. AMX0035 is also approved with conditions by Health Canada and marketed as ALBRIOZA ™ for the treatment of ALS in Canada. The Company continues to focus on the completion of its global PHOENIX Phase 3 clinical trial, which will provide additional data on the efficacy and safety profile of AMX0035 in people living with ALS, and is also developing AMX0035 in other neurodegenerative diseases. AMX0035 was designed to target endoplasmic reticulum, or ER, stress and mitochondrial dysfunction, two connected central pathways that can lead to neurodegeneration. The Company is further investigating AMX0035 in diseases where ER and mitochondrial stress are implicated, including progressive supranuclear palsy, or PSP, and Wolfram syndrome, or WS. The Company dosed the first participant in the HELIOS trial, a Phase 2 trial of AMX0035 for the treatment of WS, in April 2023. The Company dosed the first participant in the ORION trial, a global, pivotal Phase 3 trial of AMX0035 for the treatment of PSP, in December 2023. The Company is also advancing additional drug candidates for neurodegenerative diseases including AMX0114, an antisense oligonucleotide, targeting Calpain-2, a key protein in axonal degeneration, among others. Risks and Uncertainties The Company is subject to risks and uncertainties common to companies in the biotechnology industry, including, but not limited to, the outcome of preclinical studies and clinical trials, market acceptance and the successful commercialization of its approved products ALBRIOZA, which received marketing authorization with conditions in Canada in June 2022, and RELYVRIO, which was approved by the FDA in the U.S. in September 2022, potential difficulties with or delays in timing with respect to regulatory approval processes, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, ability to secure additional capital to fund operations, and risks associated with the economic challenges caused by global health crises such as the COVID-19 pandemic and economic uncertainty in various global markets caused by geopolitical instability and conflict. The Company and its contractors may experience disruptions in supply of items that are essential for its research and development and commercial activities, including, for example, raw materials and bulk drug substances that the Company imports from Europe and Canada used in the manufacturing of AMX0035, and any additional or future product candidates. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation— The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP, and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Updates, or ASU, of the Financial Accounting Standards Board, or FASB. Use of Estimates— The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. Management’s estimation process often may yield a range of potentially reasonable estimates and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: gross-to-net, or GTN, adjustments; recoverability of inventories, including those produced in preparation for product launches; accrued expenses; stock option valuations; valuation allowance for deferred tax assets and research and development expenses. F- 9 Revenue recognition— In June 2022, AMX0035 received marketing authorization with conditions as ALBRIOZA by Health Canada for the treatment of ALS, and the Company launched ALBRIOZA in Canada in July 2022. In September 2022, AMX0035 received approval as RELYVRIO by the FDA for the treatment of ALS in adults, and the Company launched RELYVRIO in the U.S. in October 2022. The Company enters into arrangements with wholesalers, specialty pharmacies and specialty distributors, or Customers, to distribute ALBRIOZA, RELYVRIO and future approved products. In accordance with ASC Topic 606 - Revenue from Contracts with Customers , or Topic 606, revenue is recognized when the customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the Company will collect the consideration the Company expects to be entitled to in exchange for the goods or services the Company transfers to its customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Product Revenue, Net The Company sells its approved products to its Customers. These Customers subsequently resell our products to specialty pharmacy providers, specialty distributors, health care providers, certain medical centers or hospitals, and patients. In addition to agreements with the Customers, the Company enters into arrangements with specialty pharmacies, health care providers and payors that provide for government mandated and/or privately negotiated rebates with respect to the purchase of our products. The Company’s customer identification process considers a number of factors, including contractual and legal factors, and who controls the Company’s product and bears inventory risk. The Company evaluates these factors on a customer-by-customer basis to determine the appropriate customer for revenue recognition purposes. In some cases, the Company may use a third-party logistics providers to deliver the Company’s product to its customers, but the Company recognizes revenue upon delivery to the customer, as its determined that the third-party logistics provider is acting as our agent. Changes in these factors or our assumptions regarding these factors could impact our revenue recognition The Company recognizes revenue on product sales when the Customer obtains control of our product, which occurs at a point in time (upon delivery). Product revenues are recorded net of applicable GTN adjustments, which are described below. If taxes should be collected from Customers relating to product sales and remitted to governmental authorities, they will be excluded from revenue. The Company expenses incremental costs of obtaining a contract when incurred, if the expected amortization period of the asset that the Company would have recognized is one year or less. However, no such costs were incurred during the years ended December 31, 2023, 2022 and 2021. GTN Adjustments Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration related to certain GTN adjustments. Components of GTN adjustments include trade discounts and allowances, product returns, third-party payor rebates, and other allowances that are offered within contracts between the Company, its Customers and payors relating to the sale of our products. These GTN adjustments, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). These estimates take into consideration a range of possible outcomes which are probability-weighted in accordance with the expected value method in Topic 606 for relevant factors such as historical experience, payer channel mix (e.g., Medicare or Medicaid), current contract prices under applicable programs, unbilled claims and processing time lags and inventory levels in the distribution channel. In certain circumstances, the Company applies the most likely method in Topic 606. The F- 10 determination to use the expected value method or the most likely method is based on the type of GTN adjustment and what method better predicts the amount of consideration we expect to be entitled to. Overall, these GTN adjustments reflect in the transaction price the amount of consideration to which the Company expects to be entitled to in exchange for transferring promised goods or services to its Customers. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, the Company will adjust these estimates, which would affect product revenue, net and earnings in the period such variances become known. Trade Discounts and Allowances The Company generally provides Customers with prompt payment discounts and pay fees for distribution services and for certain data that distributors provide to us that are explicitly stated in our contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. Payment from Customers is typically due within 30 calendar days of the invoice date, without consideration to the prompt payment discounts. Product Returns Consistent with industry practice, the Company generally offers Customers a limited right of return for product that has been purchased from the Company based on the product’s expiration date, which is set to lapse within a specified period stated in the contract. Additionally, our limited right of return policy allows for eligible returns from Customers in circumstances where product was shipped in error or was damaged in shipping, or product was returned pursuant to an official drug recall. The Company estimates the amount of product sales that may be returned by our Customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as reductions to accounts receivable, net on the consolidated balance sheets. The Company currently estimates returns using quantitative and qualitative information including, but not limited to, historical experience with returns, projected demand, levels of inventory in the distribution channel, product dating and expiration period, and whether products have been discontinued, among others. The Company has received an immaterial amount of returns to date and believes that returns of product in future periods will be minimal. Provider Chargebacks and Discounts Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These GTN adjustments are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable, net. GTN adjustments for chargebacks consist of credits that Customers have not claimed, but for which we expect to issue for units that remain in the distribution channel inventories at each reporting period-end that we expect will be sold to qualified healthcare providers, and chargebacks that Customers have claimed, but for which we have not yet issued a credit. Payor Rebates The Company contracts with certain government and private payor organizations, primarily government and commercial health insurance companies, for the payment of rebates with respect to utilization of our products. The Company is subject to discount obligations under state Medicaid programs and Medicare. These GTN adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program. The Company's liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for F- 11 the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period. Other Incentives Other incentives which the Company offers include voluntary patient assistance programs, such as its co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue for each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the consolidated balance sheets. Comprehensive Loss— Comprehensive loss includes net loss, as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. Comprehensive loss is composed of net loss and other comprehensive (loss) income. Other comprehensive (loss) income consists of unrealized gains and losses on marketable securities and foreign currency translation. Cash and Cash Equivalents— The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents represent funds invested in readily available checking and money market funds. Restricted Cash Equivalents— Restricted cash equivalents consist of $ 0.2 million of cash serving as collateral for a letter of credit issued for the Company’s office space, and $ 0.5 million as collateral for a corporate credit card program. As of December 31, 2023 and 2022, the Company’s restricted cash equivalents balance was $ 0.7 million and $ 0.7 million , respectively. Accounts receivable, net— The Company’s accounts receivable consists of amounts due from Customers related to product sales and have standard payment terms. The Company analyzes accounts that are past due for collectability and provides reserves against accounts receivable for expected credit losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are written-off against the established reserve. As of December 31, 2023 and 2022 , the credit profiles for the Company’s customers were deemed to be in good standing and expected credit losses were not material. Short-Term Investments— Short-term investments are composed of U.S. treasury notes and bills, corporate debt securities, commercial paper and agency bonds with maturities of less than one year from the balance sheet date. The Company classifies all of its short-term investments as available-for-sale. Accordingly, these investments are recorded at fair value, which is determined based on quoted market prices. Unrealized gains and losses on available-for-sale securities are included as a separate component of other accumulated comprehensive loss. The cost of short-term investments is adjusted for amortization of premiums and accretion of discounts until maturity. Such amortization and accretion are included in interest income. Realized gains and losses are included in other expense, net. The Company evaluates short-term investments for other-than-temporary impairment at the balance sheet date. Declines in fair value, if any, determined to be other than temporary-than-temporary are also included in other income, net. When assessing short-term investments for other-than-temporary declines in value, the Company considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, and the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. As of December 31, 2023 and 2022 , there were no impairment charges on short-term investments. Concentrations of Credit Risk— Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable, net. The Company maintains its cash in financial institutions that it believes have high credit quality. The Company has not experienced any losses on such accounts, and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company’s accounts receivable, net represents amounts due to the Company from customers. Amylyx performs ongoing credit evaluations of its customers and generally does not require collateral. The Company monitors its exposure and F- 12 records a reserve against uncollectible amounts as necessary. Three and four customers individually accounted for approximately 81 % and 97 % of total gross product revenue in 2023 and 2022 , respectively. No revenue was recognized in 2021. Three and three customers individually accounted for approximately 81 % and 98 % of total accounts receivable, net as of December 31, 2023 and 2022 , respectively. Fair Value Measurements— Assets and liabilities recorded at fair value on a recurring basis on the consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: • Level 1 —Quoted prices in active markets for identical assets or liabilities. • Level 2 —Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 —Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments consist of cash, cash equivalents, restricted cash equivalents, short-term investments, accounts receivable, net, accounts payable and accrued expenses. The Company’s short-term investments are carried at fair value, determined according to Level 1 and Level 2 inputs to the fair value hierarchy described above. The Company’s 2021 Notes (as defined in Note 8) were carried at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. The remaining financial instruments are stated at their respective carrying amounts, which approximate fair value due to the short-term nature of these assets and liabilities. Inventories— The Company values its inventories at the lower of cost or estimated net realizable value. The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. The Company classifies inventory as long-term when consumption or sale of the inventory is expected beyond its normal operating cycle of twelve months. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded within cost of sales. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required which would be recorded as cost of sales in the consolidated statements of operations. The Company capitalizes inventory costs associated with the Company’s products after regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. Inventory acquired prior to receipt of regulatory approval of a product candidate is expensed as research and development expense as incurred. Inventory that can be used in either the production of clinical or commercial product is initially capitalized and subsequently expensed as research and development expense when identified for use in the manufacture of drugs still in development. Property and Equipment, net— Property and equipment are stated at cost, net of accumulated depreciation. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not improve or extend the life of the assets are expensed when incurred. Upon sale or retirement of assets, the cost and accumulated depreciation are removed from the consolidated balance sheets F- 13 and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized. The range of useful lives of property and equipment is as follows: Estimated Useful Life Leasehold improvements Lesser of the estimated life or remaining lease term Furniture and fixtures 4 years Computer hardware and software 3 years Construction in progress Not depreciated Impairment of Long-Lived Assets— The Company evaluates assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. The Company has no t recognized any impairment losses in the years ended December 31, 2023 and 2022 . Research and Development— Research and development expenses include costs directly attributable to the conduct of research and development activities. Expenditures relating to research and development are expensed in the period incurred. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. In addition, research and development-related salaries and benefits, facility, and overhead costs, supplies and other related costs are included in research and development expense. Sales and Marketing Costs— Sales and marketing expenses consist primarily of wages and benefits for sales and marketing personnel, professional and consulting fees, administrative travel expenses, and marketing and advertising costs such as marketing literature, promotional activities, conferences and seminars and branding. Sales and marketing, and advertising costs are expensed as incurred and included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The Company considers advertising costs as expenses related to the promotion of the Company's commercial products. For the years ended December 31, 2023 and 2022, advertising costs were $ 9.5 million and $ 4.4 million , respectively. The Company did not have commercial products in 2021. Patent-Related Costs— Patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as selling, general and administrative expenses in the accompanying consolidated statements of operations. Stock-Based Compensation Expense— Stock-based compensation is recognized in the consolidated statements of operations based on their fair values on the date of grant over the requisite service period, which is generally equal to the vesting period of the respective award. Forfeitures are accounted for as they occur. Generally, the Company issues stock option awards with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company classifies stock-based compensation expense in the same manner in which the awards recipient’s payroll or service provider’s costs are classified. The fair value of each restricted common stock award is estimated on the date of grant based on the fair value of the Company’s common stock on that same date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the award, the risk-free interest rate, and expected dividends. The Company estimates its expected stock price volatility based on the historical volatility of publicly traded peer companies. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. There is no expected dividend yield since the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. The stock price of the Company is based on the closing price on the date of grant. Prior to the IPO, as there was no public market for the Company’s common stock, the estimated fair value of common stock was determined by the Company’s Board of Directors as of the date of each option grant, with input from management, considering third-party valuations of its common stock as well as the Company’s Board of Directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent third-party valuation through the date of the F- 14 grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation . Contingencies— From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability on the Company’s consolidated balance sheets. The Company does not accrue for contingent losses that, in its judgement, are considered to be reasonably possible, but not probable; however, it discloses the range of reasonably possible losses. There were no loss or gain contingencies recorded in the Company’s consolidated financial statements as of and during the years ended December 31, 2023 and 2022 . Leases— The Company adopted the FASB, ASC 842, Leases, or ASC 842, on January 1, 2022. ASC 842 allows the Company to elect a package of practical expedients, which include: (i) an entity need not reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the lease classification for any expired or existing leases; and (iii) an entity need not reassess any initial direct costs for any existing leases. Another practical expedient allows the Company to use hindsight in determining the lease term when considering lessee options to extend or terminate the lease and to purchase the underlying asset. The Company has elected to utilize this package of practical expedients and has not elected the hindsight methodology in its implementation of ASC 842. The Company leases its offices, and may from time to time, enter into other lease agreements in conducting its business. The Company determines if an arrangement includes a lease at the inception of the agreement. For each of the Company’s lease arrangements, the Company records a right-of-use asset representing the Company’s right to use an underlying asset for the lease term and a lease liability representing the Company’s obligation to make lease payments. Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the net present value of the remaining future minimum lease payments over the lease term. If the interest rate implicit in the Company’s leases is not readily determinable, in determining the weighted-average discount rate used to calculate the net present value of lease payments, the Company utilizes an estimate of its incremental borrowing rate based on market sources including interest rates for companies with similar credit quality for agreements of similar duration, determined by class of underlying asset, to discount the lease payments. Lease expense for the Company’s operating leases is recognized on a straight-line basis over the lease term and variable lease costs are expensed as incurred. The Company did not have financing leases as of December 31, 2023 and 2022. The Company elected the practical expedient not to apply the recognition and measurement requirements to short-term leases, which is any lease with a term of one year or less as of the lease commencement date. The lease may require the Company to pay additional amounts for maintenance and other expenses, which are generally referred to as non-lease components. The Company has elected the practical expedient to combine lease and non-lease components. If a lease includes options to extend the lease term, the Company does not assume the option will be exercised in its initial lease term assessment unless there is reasonable certainty that the Company will renew based on an assessment of economic factors present as of the lease commencement date. Prior to the adoption of ASC 842, at the inception of each lease, the Company evaluated the lease agreement to determine whether the lease was an operating or capital lease in accordance with ASC 840, Leases (ASC 840) . When any one of the four test criteria in ASC 840 was met, the lease then qualified as a capital lease. If the lease agreements contained renewal options, tenant improvement allowances, rent holidays or rent escalation clauses, the Company recorded a deferred rent asset or liability equal to the difference between the rent expense and future minimum lease payments due. The rent expense related to operating leases was recognized on a straight-line basis in the statements of operations over the term of each lease. Income Taxes— The Company accounts for income taxes using the asset and liability approach. Deferred tax assets and liabilities represent future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities and for loss carryforwards using enacted tax rates expected to be in effect in the years in which the differences reverse. A valuation allowance is established to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. To date, the Company has not incurred material interest and penalties related to income tax positions. F- 15 Valuation allowances are provided, if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2023, we continued to maintain a full valuation allowance against all of our U.S. federal and state deferred tax assets based on management’s evaluation of all available evidence, including our history of incurring significant losses from operations. Our evaluation of all available evidence also includes consideration of regulatory approvals of ALBRIOZA and RELYVRIO, including revenue generated from the sale these products in 2023 . Given the early stage of our product launch, we are uncertain about the timing and amount of future sales. We may release all or a portion of the valuation allowance in the near-term; however, the release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, our level of profitability, revenue growth, clinical program progression and expectations regarding future profitability. Segment Information— An operating segment is defined as a component of a business that engages in business activities for which it may earn revenues and incur expenses and for which discrete financial information is available that is evaluated regularly by the chief operating decision maker or makers in order to make decisions about resources to be allocated to the segment and assess its performance. The Company has determined that its CO-Chief Executive Officers are the chief operating decision makers, or CODM. The CODM reviews consolidated operating results to make decisions about allocating resources or capital to specific compounds or projects in line with the Company’s overall strategies and goals. The Company's entire business is managed by a single management team, which reports to the CO-Chief Executive Officers. The Company has one operating segment which is the business of researching and developing therapeutics for neurodegenerative disorders. For the years ended December 31, 2023 and 2022 , all of the Company's long-lived assets were held within the U.S. Net income (loss) per share— The Company follows the two-class method when computing net income (loss) per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, stock options, convertible notes, and redeemable convertible preferred stock are considered potential dilutive common shares. The Company’s redeemable convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Recent Accounting Pronouncements New Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures , or ASU 2023-09, to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption and retrospective application is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , or ASU 2023-09, which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. ASU 2023-07 is effective for the Company beginning the year ended May 31, 2025. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. F- 16 Recently Adopted Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments , or ASU 2016-13. The provisions of ASU 2016-13 modify the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology and require a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. The Company adopted ASU 2016-13 effective January 1, 2023, with no material impact on its consolidated financial statements and related disclosures. Effective January 1, 2022, the Company adopted the requirements under the ASC 842 using the modified retrospective transition approach. Comparative periods have not been restated. This standard requires entities that lease assets to recognize the assets and liabilities for the rights and obligations created by those leases on the balance sheet. The Company elected the available package of practical expedients which allows it to not reassess previous accounting conclusions around whether arrangements are or contain leases, the classification of its leases, and the treatment of initial direct costs. The Company has made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. ASC 842 was issued in order to increase transparency and comparability of financial reporting related to leasing arrangements. The main difference between previous GAAP, or ASC 840, and ASC 842 is the recognition of right-of-use lease assets and lease liabilities by lessees for those leases that were classified as operating leases under ASC 840. At January 1, 2022, the Company recorded right-of-use assets of $ 2.2 million and operating lease liabilities of $ 2.2 million. Adoption of the standard did not have a material impact on the consolidated statements of operations. For additional information regarding how the Company is accounting for leases under ASC 842, refer to Note 10. 3. PRODUCT REVENUE, NET To date, the Company’s only source of product revenue has been from the sales of RELYVRIO, known as ALBRIOZA in Canada. Significant judgment is required in estimating GTN adjustments considering historical experience, payer channel mix (e.g., Medicare or Medicaid), current contract prices under applicable programs, unbilled claims and processing time lags and inventory levels in the distribution channel. The following table reconciles gross product revenue to net product revenue: Year Ended December 31, 2023 2022 2021 (in thousands) Product revenue, gross $ 431,433 $ 27,104 $ — GTN adjustments ( 50,647 ) ( 4,874 ) — Product revenue, net $ 380,786 $ 22,230 $ — The activity and ending reserve balance for GTN adjustments were as follows for the periods indicated: Chargebacks and Cash Discounts Medicaid and Medicare Rebates Other Rebates, Returns, Discounts and Adjustments Total (in thousands) Ending balance at December 31, 2021 $ — $ — $ — $ — Provision related to sales in the current year 851 1,992 2,031 4,874 Adjustments related to prior period sales — — — — Credits and payments made ( 203 ) — ( 367 ) ( 570 ) Ending balance at December 31, 2022 $ 648 $ 1,992 $ 1,664 $ 4,304 Provision related to sales in the current year 17,898 10,887 22,378 51,163 Adjustments related to prior period sales ( 280 ) ( 236 ) — ( 516 ) Credits and payments made ( 15,123 ) ( 7,697 ) ( 12,969 ) ( 35,789 ) Ending balance at December 31, 2023 $ 3,143 $ 4,946 $ 11,073 $ 19,162 Included in the ending reserve balance for GTN adjustments are chargebacks resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to customers who directly purchase the product from the Company, discounts to customers for prompt payment and estimates for product returns. Chargebacks, discounts and returns are recorded as reductions of accounts receivable, net on the consolidated balance sheets. In addition, included in the ending reserve balance for GTN adjustments are Medicaid and Medicare rebates, other F- 17 rebates for obligations under voluntary patient assistance programs, and accrued fees payable to customers. Medicaid and Medicare rebates, other rebates and fees are recorded as a component of accrued expenses on the consolidated balance sheets. 4. SHORT-TERM INVESTMENTS The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified all of its marketable securities at December 31, 2023 and 2022 as “available-for-sale” pursuant to ASC 320, Investments – Debt and Equity Securities . The Company records available-for-sale securities at fair value, with the unrealized gains and losses included as a separate component of other accumulated comprehensive income (loss). There were no realized gains or losses recognized during the years ended December 31, 2023 and 2022. The Company adjusts the cost of available-for-sale debt securities for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income. The cost of securities sold is based on the specific identification method. The Company includes interest and dividends on securities classified as available-for-sale in interest income. Accrued interest receivable relating to the Company's available-for-sale securities is presented within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets, and amounted to $ 0.5 million and $ 0.5 million at December 31, 2023 and 2022, respectively. The following is a summary of available-for-sale securities with unrealized losses for less than 12 months as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Fair Value Unrealized Losses Fair Value Unrealized Losses Treasury notes $ — $ — $ 27,159 $ ( 14 ) Treasury bills — — 9,839 ( 2 ) Corporate debt securities — — 33,486 ( 55 ) Agency bonds 4,996 ( 3 ) — — Total available-for-sale securities in an unrealized loss position $ 4,996 $ ( 3 ) $ 70,484 $ ( 71 ) At December 31, 2023, the Company's security portfolio consisted of 11 securities related to investments in debt securities available-for-sale, of which 1 security was in an unrealized loss position. There were no securities in an unrealized loss position for greater than 12 months as of December 31, 2023. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. The Company did not record an allowance for credit losses as of December 31, 2023. Prior to January 1, 2023, the Company evaluated short-term investments for other-than-temporary impairment at the balance sheet date. Declines in fair value, if any, determined to be other-than-temporary were also included in other income, net. When assessing short-term investments for other-than-temporary declines in value, the Company considered such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, and the Company’s ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. The Company determined it did not hold any investments with any other-than-temporary impairment as of December 31, 2022. Short-term investments, which are classified as available-for-sale, consisted of the following: December 31, 2023 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Values (in thousands) Treasury bills $ 196,098 $ 67 $ — $ 196,165 Agency bonds 4,999 — ( 3 ) 4,996 Total short-term investments $ 201,097 $ 67 $ ( 3 ) $ 201,161 F- 18 December 31, 2022 Amortized Cost Basis Unrealized Gain Unrealized Loss Fair Values (in thousands) Treasury notes $ 27,173 $ — $ ( 14 ) $ 27,159 Treasury bills 59,326 10 ( 2 ) 59,334 Commercial paper 134,375 — — 134,375 Corporate debt securities 58,795 13 ( 55 ) 58,753 Agency bonds 4,781 17 0 4,798 Total short-term investments $ 284,450 $ 40 $ ( 71 ) $ 284,419 5. INVENTORIES Inventories consisted of the following: December 31, 2023 2022 (in thousands) Raw materials $ 53,144 $ 7,151 Work in process 18,945 1,681 Finished goods 11,191 937 Total inventories $ 83,280 $ 9,769 The Company capitalizes inventory costs associated with the Company’s products after regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. As of December 31, 2023, the Company had $ 2.7 million of inventory on hand that was acquired prior to regulatory approvals. This inventory was expensed to research and development as the future economic benefit was not probable. The Company began to capitalize inventory costs upon receipt of regulatory approvals in 2022. Long-term inventory consists primarily of raw materials, which have a current usable period of approximately two to three years in its raw material form. Raw material has until its stated expiry date to be manufactured into finished goods, at which point the material has another twelve to eighteen months of useful life. The Company classifies inventory as long-term when consumption or sale of the inventory is expected beyond twelve months. Inventory amounts written down as a result of obsolescence or other reasons are charged to cost of sales. For the years ended December 31, 2023, 2022, and 2021 the Company recognized write-downs of $ 3.3 million , $ 0.4 million and zero , respectively. 6. Property and equipment, net Property and equipment, net consisted of the following: December 31, 2023 2022 (in thousands) Furniture and fixtures $ 382 $ 362 Computer hardware and software 3,167 1,810 Leasehold improvements 176 176 Construction in progress 589 803 Total property and equipment 4,314 3,151 Less: accumulated depreciation ( 1,628 ) ( 540 ) Total property and equipment, net $ 2,686 $ 2,611 F- 19 7. Accrued Expenses Accrued expenses consisted of the following: December 31, 2023 2022 (in thousands) Accrued external research and development $ 12,625 $ 8,424 Accrued benefits and incentive compensation 16,790 15,231 Accrued manufacturing 1,652 4,596 Accrued consulting and other professional fees 6,506 4,116 Accrued rebates and co-pay assistance 16,063 3,582 Accrued royalties 3,111 1,358 Other accrued expenses 977 1,005 Total accrued expenses $ 57,724 $ 38,312 8. CONVERTIBLE NOTES Issuance of the 2021 Notes In January 2021, the Company issued, in aggregate, $ 27.3 million in convertible notes, or 2021 Notes, to certain investors, including related parties, of which proceeds of $ 1.2 million were received in advance of issuance of the 2021 Notes in December 2020 and the remaining proceeds of $ 26.1 million were received in January and February 2021. The 2021 Notes were to mature on June 30, 2022 and carried both automatic and optional conversion features. The 2021 Notes were secured and carried an interest rate of 3 %. The Company recorded the $1.2 million of proceeds received in December 2020 as proceeds received in advance of issuance of 2021 Notes in the consolidated balance sheet as of December 31, 2020, as the subscription agreement and commitment to issue the 2021 Notes was not effective until January 2021. The Company qualified for and elected to account for the 2021 Notes under the fair value option and, in doing so, bypassed the analysis of potential embedded derivative features. The Company believes that the fair value option better reflects the underlying economics of the 2021 Notes. As a result, the 2021 Notes were recorded at fair value upon issuance, which was determined to be equal to principal amounts of these notes of $ 27.3 million. At each financial reporting period, and immediately prior to conversion, the Company remeasured the fair value of the 2021 Notes. The change in fair value of the 2021 Notes from issuance date to the conversion date totaled $ 5.2 million, which is recorded as change in fair value of convertible notes in the consolidated statement of operations for the year ended December 31, 2021. Conversion of the 2021 Notes In July 2021, the Company consummated a financing transaction in which it issued shares of Series C-1 redeemable convertible preferred stock. The consummation of this financing transaction resulted in the automatic conversion of the 2021 Notes into shares of Series C-2 redeemable convertible preferred stock (together with the Series C-1 redeemable convertible preferred stock, the “Series C Preferred Stock”) pursuant to their original terms. The Series C Preferred Stock was determined to have a fair value of $ 10.265809 . Under the fair value option, the 2021 Notes were remeasured to fair value immediately prior to conversion at a price per share equal to the fair value of the Series C-1 redeemable convertible preferred stock. The Company recorded $ 5.2 million loss related to change in fair value of the 2021 Notes in its consolidated statement of operations for the year ended December 31, 2021. The 2021 Notes converted into 3,170,585 shares of Series C-2 redeemable convertible preferred stock at the effective conversion price of $ 8.725938 . Convertible Notes—Related Parties There were no convertible notes issued to related parties that were outstanding as of December 31, 2023 and 2022 . In connection with the issuance of the 2021 Notes, the Company issued, in aggregate, $ 14.3 million of convertible notes to certain related parties. These notes were issued under the same terms and conditions as the 2021 Notes. F- 20 9 . FAIR VALUE MEASUREMENTS The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values: December 31, 2023 Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents $ 76,710 $ — $ — $ 76,710 Short-term investments: Treasury bills 196,165 — — 196,165 Agency bonds — 4,996 — 4,996 Total short-term investments 196,165 4,996 — 201,161 Restricted cash equivalents 719 — — 719 Total financial assets $ 273,594 $ 4,996 $ — $ 278,590 December 31, 2022 Level 1 Level 2 Level 3 Total (in thousands) Assets: Cash equivalents $ 23,567 $ 9,989 $ — $ 33,556 Short-term investments: Treasury notes 27,159 — — 27,159 Treasury bills 59,334 — — 59,334 Commercial paper — 134,375 — 134,375 Corporate debt securities — 58,753 — 58,753 Agency bonds — 4,798 — 4,798 Total short-term investments 86,493 197,926 — 284,419 Restricted cash equivalents 719 — — 719 Total financial assets $ 110,779 $ 207,915 $ — $ 318,694 Valuation of Short-Term Investments The Company classifies its money market funds, treasury notes and treasury bills as Level 1 assets under the fair value hierarchy, as these assets have been valued using quoted market prices for identical assets in active markets without any valuation adjustment. The Company classifies its commercial paper, corporate debt securities, and agency bonds as Level 2 assets under the fair value hierarchy, as these assets have been valued using information obtained through a third-party pricing service at each balance sheet date, using observable market inputs that may include trade information, broker or dealer quotes, bids, offers, or a combination of these data sources. The Company does no t hold any short-term investments classified as Level 3, which are securities valued using unobservable inputs. The Company has not transferred any investment securities between the classification levels . There were no other assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2023 and 2022 . 10. LEASES The Company leases its office facilities under non-cancelable operating leases that expire at various dates through October 2026. The Company entered into an office space lease at 121 First Street in Cambridge, Massachusetts on January 10, 2022, for 36 months , with an option to extend the lease for 3 years . Because the Company was not reasonably certain to exercise the option to extend the lease at inception, the option to extend was not considered in determining the lease term. The Company initially recognized a right-of-use asset of $ 5.0 million and a lease liability of $ 5.0 million upon commencement of the lease. F- 21 Components of lease expense required by ASC 842 are presented below for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in thousands) Lease cost Operating lease cost $ 2,175 $ 2,136 Total lease cost $ 2,175 $ 2,136 Lease liabilities are measured by calculating the present value of remaining lease payments under the lease arrangement. Since the rates implicit in our leases are not readily determinable, the Company uses estimated incremental borrowing rates in determining the discount rate used to calculate the present value of remaining lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term equal to the lease term in a similar economic environment. The incremental borrowing rate is based on the information available at commencement date. As the Company has no recent external borrowings, the incremental borrowing is a hypothetical rate based on our understanding of what our credit rating would be and adjusted to reflect a collateralized borrowing. The Company’s leases contain renewal options that can extend the lease for additional years. Because the Company is not reasonably certain to exercise these renewal options, they are not considered in determining the lease terms, and associated potential additional payments are excluded from lease payments. The Company has elected to account for each lease component and its associated non-lease components as a single lease component and has allocated all of the contract consideration across lease components only. The Company has existing net leases in which the non-lease components (e.g., common area maintenance) are paid separately from rent based on actual costs incurred and therefore are not included in the operating lease right-of-use assets and lease liabilities and are reflected as an expense in the period incurred. The following table summarizes the presentation in the Company’s consolidated balance sheet of its operating leases: December 31, 2023 2022 (in thousands) Assets Operating lease right-of-use assets $ 3,725 $ 5,524 Liabilities Operating lease right-of-use liabilities, current $ 2,257 $ 2,040 Operating lease right-of-use liabilities, net of current portion 1,980 4,237 Total operating lease liabilities $ 4,237 $ 6,277 During the years ended December 31, 2023 and 2022, the Company made cash payments for operating leases of $ 2.4 million and $ 1.4 million , respectively. Future minimum lease payments under non-cancelable leases as of December 31, 2023, were as detailed below (in thousands): As of December 31, 2023 2024 $ 2,478 2025 1,586 2026 476 2027 — 2028 — Total undiscounted lease payments 4,540 Less: imputed interest ( 303 ) Total operating lease liabilities $ 4,237 As of December 31, 2023 and 2022, the weighted average remaining lease term was 2 years and 2.9 years , respectively. As of December 31, 2023 and 2022, the weighted average incremental borrowing rate used to determine the operating lease right-of-use assets was 7.3 % . F- 22 11. Redeemable Convertible Preferred Stock On July 1, 2021, the Company amended its certificate of incorporation in which it authorized 13,150,430 shares of Series C-1 redeemable convertible preferred stock and 3,170,585 shares of Series C-2 redeemable convertible preferred stock. In July 2021, the Company consummated a financing transaction in which it issued 13,150,430 shares of Series C-1 redeemable convertible preferred stock. In connection with the issuance of these shares, the principal including accrued interest of the 2021 Notes totaling $ 27.7 million automatically converted into 3,170,585 shares of Series C-2 redeemable convertible preferred stock. The Company’s redeemable convertible preferred stock consisted of the following: December 31, 2021 (dollars in thousands) Preferred Shares Authorized Preferred Shares Issued and Outstanding Carrying Value Liquidation Preference Common Stock Issuable Upon Conversion Series A preferred stock 6,289,609 6,289,609 $ 7,675 $ 7,730 6,407,256 Series B preferred stock 15,100,000 14,496,835 $ 64,387 $ 246,070 16,746,059 Series C-1 preferred stock 13,150,430 13,150,430 $ 134,791 $ 135,000 13,150,430 Series C-2 preferred stock 3,170,585 3,170,585 $ 32,498 $ 27,666 3,170,585 37,710,624 37,107,459 $ 239,351 $ 416,466 39,474,330 In January 2022, upon the completion of the Company’s IPO, all of the Company's outstanding shares of preferred stock were converted into shares of its common stock. There were no redeemable convertible preferred stock outstanding as of December 31, 2023 or 2022 . 12. Stockholders’ EQUITY (Deficit ) Common Stock— Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders provided, however, that, except as otherwise required by law, holders of common stock shall not be entitled to vote on any amendment to the Company’s Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Certificate of Incorporation or pursuant to the Delaware General Corporation Law. Common stockholders are entitled to receive dividends, as may be declared by the Company’s Board of Directors, if any, subject to the preferential dividend rights of the Preferred Stock. No dividends were declared or paid during the years ended December 31, 2023 and 2022. The Company had reserved shares of common stock for issuance in connection with the following: December 31, 2023 2022 Common stock authorized 300,000,000 300,000,000 Common stock issued and outstanding 67,707,432 66,512,011 Common stock authorized and reserved for future issuances: Common stock reserved for the exercise of stock options 9,823,248 8,480,950 Common stock reserved for the unvested restricted stock units 1,112,542 740,297 Common stock reserved for future issuance of share-based awards 5,253,507 2,817,751 Total common stock authorized and reserved for future issuance 16,189,297 12,038,998 Unreserved common stock available for future issuance 216,103,271 221,448,991 In January 2022, the Company completed its IPO in which the Company issued and sold 11,369,369 shares of its common stock at a price of $ 19.00 per share. After deducting underwriting discounts and commissions and estimated offering expenses, the Company received net proceeds of approximately $ 196.4 million. Upon the completion of the IPO, all of the Company’s outstanding shares of preferred stock were converted into shares of its common stock. F- 23 In October 2022, the Company completed a follow-on public offering in which the Company issued 7,697,812 shares of its common stock at a price of $ 32.00 per share. After deducting underwriting discounts and commissions and estimated offering expenses, the Company received net proceeds of approximately $ 230.6 million. 13. Stock Option and Grant Plan Stock Incentive Plan— In January 2022, the Company’s board of directors adopted, and its stockholders approved the 2022 Stock Option and Incentive Plan, or 2022 Plan, which became effective on January 5, 2022, at which point no further grants would be made under the 2015 Stock Option and Restricted Stock Plan, or 2015 Plan. Under the 2022 Plan, the Company may grant incentive stock options, or ISOs, non-statutory stock options, stock appreciation rights, restricted stock units, restricted stock awards and other stock-based awards. As of December 31, 2023 , there were 3,454,220 shares available for future issuance under the 2022 Plan. The options issued under the 2022 Plan expire 10 years following the date of grant. Stock options and restricted stock units typically vest over 4 years. We recognize the compensation cost of awards subject to service-based vesting conditions over the requisite service period, which is generally equal to the vesting period of the respective award. Initially, subject to adjustment as provided in the 2022 Plan, the aggregate number of shares of the Company’s common stock available for issuance under the 2022 Plan is 7,650,000 . The number of shares of the Company’s common stock reserved for issuance under the 2022 Plan will automatically increase on January 1 of each year commencing January 1, 2023, by 5 % of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. The maximum current number of shares that may be issued pursuant to the exercise of ISOs under the 2022 Plan is 7,650,000 . The maximum number of shares of the Company’s common stock subject to awards granted under the 2022 Plan or otherwise during a single calendar year to any individual nonemployee director, taken together with any cash fees paid by the Company to such nonemployee director during the calendar year for serving on the Company’s board of directors, will not exceed $ 750,000 in total value, or, with respect to the calendar year in which a nonemployee director is first appointed or elected to the Company’s board of directors, $ 1,000,000 . All options and awards granted under the 2015 Plan consisted of the Company’s common stock. As of January 6, 2022, no additional stock awards have been or will be granted under the 2015 Plan. Although the 2015 Plan was terminated as to future awards in January 2022, it continues to govern the terms of options that remain outstanding under the 2015 Plan. Inducement Plan— In July 2023, the Company’s board of directors adopted the Amylyx Pharmaceuticals, Inc. 2023 Inducement Plan, or the Inducement Plan, to grant equity awards to induce highly-qualified prospective officers and employees who are not currently employed by the Company to accept employment and provide them with a proprietary interest in the Company. The Company has reserved 750,000 shares of its common stock that may be issued under the Inducement Plan. As of December 31, 2023, there were 529,167 shares available for future issuance under the Inducement Plan. Employee Stock Purchase Plan— In January 2022, the Company’s board of directors adopted the 2022 Employee Stock Purchase Plan, or ESPP, which was subsequently approved by the Company's stockholders. The ESPP initially reserves and authorizes the issuance of up to a total of 605,000 shares of common stock to participating employees. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2023 and each January 1 thereafter through January 1, 2032, by the least of (i) 1 % of the outstanding number of shares of our common stock on the immediately preceding December 31, (ii) 1,210,000 shares or (iii) such number of shares of common stock as determined by the ESPP administrator. The initial purchase period under the ESPP has not yet commenced. As of December 31, 2023, there were 1,270,120 shares available for future issuance under the ESPP. General Option Information F- 24 The Company estimates the fair value of stock option awards on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions: Year Ended December 31, 2023 2022 2021 Grant price $ 29.58 $ 20.29 $ 7.69 Risk-free interest rate 3.77 % 1.97 % 1.01 % Expected term (in years) 6.05 6.07 5.73 Expected volatility 70.35 % 88.75 % 81.61 % Dividend yield 0.00 % 0.00 % 0.00 % The per share weighted average grant date fair value of stock options granted during the year ended December 31, 2023, 2022 and 2021 was $ 19.56 , $ 15.10 and $ 5.25 , respectively. A summary of option activity for the year ended December 31, 2023, is as follows: Number of Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2022 8,480,950 $ 13.19 8.2 $ 201,765 Granted 2,864,696 $ 29.55 Exercised ( 1,010,376 ) $ 5.66 Cancelled or forfeited ( 512,022 ) $ 19.86 Outstanding at December 31, 2023 9,823,248 $ 18.39 7.9 $ 27,639 Exercisable at December 31, 2023 3,877,634 $ 12.58 7.0 $ 18,240 Unvested at December 31, 2023 5,945,614 $ 22.17 8.5 $ 9,399 The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 20.6 million , $ 14.2 million and $ 6.2 million respectively. The total fair value of stock options vested during the years ended December 31, 2023, 2022 and 2021 was $ 31.2 million , $ 8.8 million and $ 1.3 million , respectively. Restricted Stock Unit Activity A summary of restricted stock unit activity for the year ended December 31, 2023, is as follows: Number of shares Weighted Average Grant Date Fair Value Nonvested as of December 31, 2022 740,297 $ 20.02 Granted 637,664 $ 29.04 Vested ( 185,045 ) $ 20.02 Forfeited ( 80,374 ) $ 25.41 Nonvested as of December 31, 2023 1,112,542 $ 24.80 Stock-Based Compensation Expense— The Company recorded stock-based compensation expense in the following expense categories of its statements of operations: F- 25 Year Ended December 31, 2023 2022 2021 (in thousands) Research and development expenses $ 9,843 $ 5,639 $ 888 Selling, general and administrative expenses 27,318 16,075 2,248 Total stock-based compensation $ 37,161 $ 21,714 $ 3,136 The Company capitalized stock-based compensation expense of $ 0.4 million , less than $ 0.1 million, and zero for the years ended December 31, 2023, 2022 and 2021, respectively. Stock-based compensation recognized through cost of sales were $ 0.2 million , less than $ 0.1 million, and zero for years ended December 31, 2023, 2022 and 2021, respectively. The following table summarizes stock-based compensation by type of award: Year Ended December 31, 2023 2022 2021 (in thousands) Stock options $ 30,500 $ 18,844 $ 3,136 Restricted stock units 6,661 2,870 — Total stock-based compensation expense $ 37,161 $ 21,714 $ 3,136 The following table summarizes unrecognized stock-based compensation expense as of December 31, 2023, by type of awards, and the weighted-average period over which that expense is expected to be recognized. The total unrecognized stock-based compensation expense will be adjusted for actual forfeitures as they occur. As of December 31, 2023 Unrecognized Expense Weighted-average Recognition Period (in thousands) (in years) Stock options $ 78,966 2.63 Restricted stock units $ 21,693 2.91 14. Income Taxes The components of net loss before the provision for income taxes are as follows: Year Ended December 31, 2023 2022 2021 (in thousands) U.S. $ 52,263 $ ( 198,704 ) $ ( 87,904 ) Non-U.S. 2,034 1,103 ( 27 ) Income (loss) before income taxes $ 54,297 $ ( 197,601 ) $ ( 87,931 ) The provision for income taxes is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Current income tax provision U.S. - Federal $ 1,219 $ — $ — U.S. - State 2,839 — — Non-U.S. 1,192 774 — $ 5,250 $ 774 $ — Deferred income tax provision Non-U.S. $ ( 224 ) $ — $ — Provision for income taxes $ 5,026 $ 774 $ — F- 26 A reconciliation of the Company’s effective income tax rate to the U.S. statutory federal income tax rate of 21 % for the years ended December 31, 2023, 2022 and 2021 is as follows: Year Ended December 31, 2023 2022 2021 Tax at U.S. statutory tax rate 21.0 % 21.0 % 21.0 % State income tax benefit 3.3 % 3.9 % 4.0 % Research and development tax credits ( 12.6 )% 1.4 % 1.5 % Executive Compensation 6.2 % ( 0.5 )% — % Uncertain Tax Positions 2.1 % ( 0.2 )% ( 0.2 )% Valuation allowances ( 12.2 )% ( 25.5 )% ( 24.4 )% Other 1.5 % ( 0.5 )% ( 1.9 )% Effective income tax rate 9.3 % ( 0.4 )% 0.0 % Deferred tax assets and liabilities were as follows: Year Ended December 31, 2023 2022 (in thousands) Deferred tax assets: Federal net operating loss carryforwards $ 14,667 $ 42,673 State net operating loss carryforwards 8,164 10,628 Capitalized research and development costs 39,297 18,079 Inventory 1,090 5,721 Tax credits 8,039 5,581 Stock Based Compensation 3,792 1,804 Accruals and other 10,425 7,480 Total deferred tax assets $ 85,474 $ 91,966 Valuation allowance ( 83,922 ) ( 90,587 ) Net total deferred tax assets $ 1,552 $ 1,379 Deferred tax liabilities: Other ( 1,328 ) ( 1,379 ) Total deferred tax liabilities $ ( 1,328 ) $ ( 1,379 ) Net deferred tax assets $ 224 $ — On a periodic basis the Company reassess the valuation allowance that has been established, weighing all positive and negative evidence. In 2023, the Company reassessed the valuation allowance and considered negative evidence, including cumulative losses over the three years ended December 31, 2023, and positive evidence, including recent regulatory approvals of ALBRIOZA and RELYVRIO, 2023 profitability and positive cash flow, and realization of a portion of prior year U.S. federal and state NOL and research and development tax credit carryforwards. After assessing both the negative and positive evidence, the Company concluded that a full valuation should continue to be retained against the net deferred tax assets as of December 31, 2023. It is possible that all or a portion of the valuation allowance will be released in the near-term. The release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, levels of profitability, revenue growth, clinical program progression and expectations regarding future profitability. As of December 31, 2023 and 2022, the Company had federal NOL loss carryforwards of approximately $ 69.8 million and $ 203.2 million , respectively, and state NOL loss carryforwards of approximately $ 124.6 million and $ 164.1 million , respectively, which are available to reduce future taxable income. All U.S. federal NOL carryforwards as of December 31, 2023 carry forward indefinitely. Of the $ 124.6 million state NOL carryforwards, $ 82.8 million relate to Massachusetts and begin to expire in 2035 . As of December 31, 2023 and 2022, the Company also had federal tax credits of $ 6.8 million and $ 4.6 million , respectively, and state tax credits of $ 1.6 million and $ 1.2 million , respectively. The tax credit carryforwards will expire at various dates beginning in 2035. The utilization of NOL and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the IRC. Ownership changes occurred in the years ended December 31, 2016 and F- 27 2023. These ownership changes do not impact the Company’s overall ability to utilize NOL carryforwards and research and development tax credit carryforwards but may limit the amount that can be utilized annually to offset future taxable income. The following table reflects the roll-forward of the Company’s valuation allowance for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (in thousands) Valuation allowance at beginning of year $ 90,587 $ 40,346 $ 18,900 (Decreases) increases recorded to income tax provision ( 6,665 ) 50,241 21,446 Valuation allowance at end of year $ 83,922 $ 90,587 $ 40,346 The decrease in the valuation allowance recorded during the year primarily relates to taxable income resulting pre-tax profits earned in 2023 and increased as a result of required capitalization of research and development costs. The Company accounts for uncertainty in income taxes under the provisions of ASC 740 which defines the thresholds for recognizing the benefits of tax return positions in the consolidated financial statements as “more likely than not” to be sustained by the taxing authority. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlemen t. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Balance at beginning of the period $ 1,013 $ 564 $ 349 Increases (decreases) related to tax positions taken during prior years 271 ( 32 ) — Increases related to tax positions taken during the current year 925 481 215 Balance at end of the period $ 2,209 $ 1,013 $ 564 The Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority. All uncertain tax benefits, if recognized, would impact the effective tax rate if recognized, offset by changes to the Company’s valuation allowance which also would impact the effective tax rate. The Company does not expect the amount of unrecognized tax benefits to materially change over next 12 months. The Company accrues interest and penalties related to unrecognized tax benefits as a component of its provision for income taxes. The Company did no t recognize any interest or penalties related to uncertain tax positions during the years ended December 31, 2023, 2022 and 2021. The Company files U.S. federal, foreign and state income tax returns in various jurisdictions. The status of limitations varies by jurisdiction. There are currently no federal or state audits or examinations in process. 15. EMPLOYEE BENEFIT PLANS The Company maintains a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Plan participants are able to defer eligible compensation subject to applicable annual IRC limits. For the year ended December 31, 2022, the Company provided a safe-harbor contribution o f 3 % of employee compensation to employees who satisfy the minimum service requirements. Effective October 1, 2023, the safe-harbor contribution was increased to 5 %. The Company made $ 2.3 million and $ 1.2 million of safe-harbor contributions for the years ended December 31, 2023 and 2022 , respectively. 16. NET INCOME (LOSS) PER SHARE Net Income (Loss) per Share Basic earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the combined weighted average F- 28 number of common shares and potentially dilutive shares, which include the assumed exercise of employee stock options and unvested restricted stock units. In computing diluted earnings per share, the Company utilizes the treasury stock method. A summary of the numerator and denominators used in the computation of earnings per share follows (in thousands, except share and per share data: December 31, 2023 2022 2021 Numerator: Net income (loss) $ 49,271 $ ( 198,375 ) $ ( 87,931 ) Denominator: Weighted-average shares used to compute basic net income (loss) per share 67,234,465 58,495,587 6,586,349 Dilutive effect of employee stock options and restricted stock units 2,756,875 — — Weighted-average shares used to compute diluted net income (loss) per share 69,991,340 58,495,587 6,586,349 Net income (loss) per share Basic $ 0.73 $ ( 3.39 ) $ ( 13.35 ) Diluted $ 0.70 $ ( 3.39 ) $ ( 13.35 ) Because the Company reported a net loss for the twelve months ended December 31, 2022 and 2021, basic and diluted net loss per share were the same. All stock options and restricted stock units were excluded from the computation of diluted weighted-average shares outstanding because such securities would have an antidilutive impact for the twelve months ended December 31, 2022 and 2021 . The following stock options and restricted stock units outstanding at each period end have been excluded from the calculation of diluted net income (loss) per share because their inclusion would have been antidilutive: December 31, 2023 2022 2021 Options to purchase common stock 5,775,303 8,480,950 5,339,011 Restricted stock units 543,233 740,297 — Redeemable convertible preferred stock — — 39,474,330 Total excluded common stock equivalents 6,318,536 9,221,247 44,813,341 17. Related party transactions Convertible Notes In connection with the issuance of the 2021 Notes, the Company issued, in aggregate, $ 14.3 million of convertible promissory notes to Morningside Ventures Investments Limited, and certain members of the board of directors of the Company. Morningside Ventures Investments Limited was a 5 % significant stockholder of the Company at the time of the transaction. These notes were issued under the same terms and conditions as the 2021 Notes (see Note 8). Supplier Agreements In the ordinary course of business, the Company may purchase materials or supplies or services from entities that are associated with a party that meets the criteria of a related party of the Company. These transactions are reviewed quarterly and to date have not been material to the Company’s consolidated financial statements. 18. Commitments and Contingencies Legal Proceedings— As of December 31, 2023, the Company is not a party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or potential range of loss is probable and reasonably estimated under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company recognizes expenses for its costs related to its legal proceedings, as incurred. Royalty Payments— Between August 2016 and February 2019, the Company entered into grant agreements with the ALS Association, ALS Finding a Cure Foundation, Alzheimer’s Drug Discovery Foundation, Alzheimer’s Association and F- 29 Cure Alzheimer’s Fund, or Grantors. Under the terms of the agreements, the Company was granted, in aggregate, $ 4.3 million. These grants were provided to the Company for the purpose of furthering the research and development of AMX0035 as a therapeutic benefit for ALS and Alzheimer’s disease. Under the terms of the arrangements, the Company would receive a tranche of funds as it completed certain milestones. Pursuant to the terms of the grant agreements, the Company has certain payment obligations that are contingent upon future events such as the achievement of commercialization or the receipt of proceeds from a revenue generating transaction resulting from the projects for which the grants are used for. Pursuant to the terms of the respective grant agreements among the Company, ALS Association and ALS Finding a Cure, the Company will be required to make royalty payments to each Grantor in the total amount equal to 150 % of the grant received. The royalty payments will be achieved through a combination of the following payment methods: (i) an annual installment payment of 3 % of net sales of any products developed under the project for which the grant was used for and (ii) 3 % of cash proceeds resulting from revenue generating transaction under the project for which the grants are used for. During the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 3.1 million , $ 1.4 million and zero in royalty expense, respectively, which is included in cost of sales in the consolidated financial statements. As of December 31, 2023, no further royalties remain to be accrued under the grant agreements with the ALS Association and ALS Finding a Cure Foundation. Under the terms of the respective grant agreements among the Company, Alzheimer’s Drug Discovery Foundation, the Alzheimer’s Association, and Cure Alzheimer’s Fund, the Company will make royalty payments up to the maximum amount of $ 15.0 million to each Grantor (or $ 45.0 million in aggregate). The royalty payment will be made through a combination of the following payment methods: (i) 4 % of annual net sales of any product commercialized from the project for which the grant was used for and directly related to the treatment of the Alzheimer’s disease and (ii) 15 % of all royalties and cash proceeds resulting from revenue generating transactions associated with the projects for which the grants were used for under the grant agreements. As the conditions that would trigger royalty payments under the agreements have not occurred, no amounts have been recorded in the consolidated financial statements for the years ended December 31, 2023 and 2022. Purchase Commitments— The Company enters into agreements in the normal course of business with contract manufacturing organizations for raw material purchases and manufacturing services. As of December 31, 2023, the Company had committed approximately $ 195.0 million under these agreements related to raw material purchases and manufacturing services, which are expected to be paid through 2028. 19 . Subsequent Events On February 9, 2024, a putative class action lawsuit was filed in the U.S. District Court for the Southern District of New York against the Company and certain of its current and former officers ( Shih v. Amylyx Pharmaceuticals, Inc., et al. , Case Number 1:24-CV-00988 (the “Shih Complaint”). The Shih Complaint asserts a claim against all defendants for alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and a claim under Section 20(a) against certain current and former officers as alleged controlling persons. The Shih Complaint alleges that defendants made materially false and misleading statements related to the commercial results and prospects for RELYVRIO. The Shih Complaint seeks unspecified damages, interest, costs and attorneys’ fees, and other unspecified relief that the court deems appropriate. The Company intends to defend against the Shih Complaint vigorously. At this time, an estimate of the impact, if any, of these claims cannot be made. F- 30